FHA loans are government-backed mortgages designed for borrowers with lower credit scores and smaller down payments. They’re the most popular mortgage for first-time home buyers. Here’s everything you need to know.
FHA Loan Requirements at a Glance
| Requirement | FHA Minimum | Typical Lender Minimum |
|---|---|---|
| Credit score (3.5% down) | 580 | 620 |
| Credit score (10% down) | 500 | 580 |
| Down payment | 3.5% (580+ score) or 10% (500-579) | Same |
| Debt-to-income ratio (front-end) | 31% | 31% |
| Debt-to-income ratio (back-end) | 43% | 43-50% with compensating factors |
| Employment history | 2 years steady employment | Same |
| Property type | Primary residence only | Same |
| Occupancy | Must move in within 60 days | Same |
| Upfront mortgage insurance (UFMIP) | 1.75% of loan amount | Same |
| Annual mortgage insurance (MIP) | 0.55% of loan amount | Same |
2026 FHA Loan Limits
| Area Type | Single-Family | Duplex | Triplex | Fourplex |
|---|---|---|---|---|
| Low-cost area (floor) | $498,257 | $637,950 | $771,125 | $958,350 |
| High-cost area (ceiling) | $1,149,825 | $1,472,250 | $1,779,525 | $2,211,600 |
FHA Limits for Major Metro Areas (2026)
| Metro Area | FHA Limit (Single-Family) |
|---|---|
| New York City, NY | $1,149,825 |
| Los Angeles, CA | $1,149,825 |
| San Francisco, CA | $1,149,825 |
| Seattle, WA | $977,500 |
| Boston, MA | $862,500 |
| Denver, CO | $816,750 |
| Washington, DC | $1,149,825 |
| Miami, FL | $621,000 |
| Chicago, IL | $498,257 |
| Dallas, TX | $498,257 |
| Atlanta, GA | $498,257 |
| Phoenix, AZ | $498,257 |
| Houston, TX | $498,257 |
FHA Down Payment Details
Down Payment by Home Price
| Home Price | 3.5% Down | 10% Down | Cash Needed (3.5% + Closing Costs) |
|---|---|---|---|
| $200,000 | $7,000 | $20,000 | $13,000-$17,000 |
| $250,000 | $8,750 | $25,000 | $16,250-$21,250 |
| $300,000 | $10,500 | $30,000 | $19,500-$25,500 |
| $350,000 | $12,250 | $35,000 | $22,750-$29,750 |
| $400,000 | $14,000 | $40,000 | $26,000-$34,000 |
| $500,000 | $17,500 | $50,000 | $32,500-$42,500 |
Acceptable Down Payment Sources
| Source | Allowed? | Documentation Needed |
|---|---|---|
| Personal savings | Yes | 2 months bank statements |
| Gift from family | Yes | Gift letter, donor’s bank statement |
| Down payment assistance program | Yes | Program documentation |
| Employer assistance | Yes | Employer letter |
| Government grants | Yes | Grant documentation |
| Borrowed funds (secured) | Yes | Proof of collateral |
| Borrowed funds (unsecured) | No | N/A |
| Cash with no paper trail | No | All funds must be sourced |
FHA Mortgage Insurance Costs
Upfront Mortgage Insurance Premium (UFMIP)
| Loan Amount | UFMIP (1.75%) | If Financed Into Loan |
|---|---|---|
| $200,000 | $3,500 | New loan: $203,500 |
| $250,000 | $4,375 | New loan: $254,375 |
| $300,000 | $5,250 | New loan: $305,250 |
| $400,000 | $7,000 | New loan: $407,000 |
| $500,000 | $8,750 | New loan: $508,750 |
Annual MIP (Monthly Cost)
| Loan Amount | Annual MIP (0.55%) | Monthly MIP Cost |
|---|---|---|
| $200,000 | $1,100 | $92 |
| $250,000 | $1,375 | $115 |
| $300,000 | $1,650 | $138 |
| $400,000 | $2,200 | $183 |
| $500,000 | $2,750 | $229 |
How Long MIP Lasts
| Down Payment | MIP Duration |
|---|---|
| Less than 10% | Life of the loan |
| 10% or more | 11 years |
FHA vs. Conventional Loans
| Feature | FHA Loan | Conventional Loan |
|---|---|---|
| Minimum credit score | 580 (3.5% down) or 500 (10% down) | 620 (typically 640+) |
| Minimum down payment | 3.5% | 3% (some programs) or 5% |
| Mortgage insurance | Required: UFMIP + annual MIP | PMI required under 20% down |
| MI cancellation | Only with 10%+ down (after 11 years) or refinance | Auto-cancels at 78% LTV |
| Loan limits | $498,257-$1,149,825 | $766,550-$1,149,825 (conforming) |
| Property standards | Strict FHA appraisal requirements | Standard appraisal |
| DTI limit | 43% (up to 50% with compensating factors) | 43-50% |
| Interest rates | Typically 0.25-0.5% lower than conventional | Varies by credit and LTV |
| Seller concessions | Up to 6% of sale price | 3-9% depending on down payment |
| Assumable? | Yes | No |
Monthly Payment Comparison: $300,000 Home
| Cost | FHA (3.5% Down) | Conventional (5% Down) | Conventional (20% Down) |
|---|---|---|---|
| Down payment | $10,500 | $15,000 | $60,000 |
| Loan amount | $289,500 + UFMIP = $294,568 | $285,000 | $240,000 |
| Interest rate | 6.5% | 6.75% | 6.75% |
| Principal + interest | $1,862 | $1,848 | $1,556 |
| Mortgage insurance | $138/month (MIP) | $119/month (PMI) | $0 |
| Total P&I + MI | $2,000 | $1,967 | $1,556 |
| MI cancellation | Never (unless refinance) | At 78% LTV (~8 years) | N/A |
FHA Appraisal Requirements
FHA appraisals are stricter than conventional—the property must meet HUD’s Minimum Property Requirements:
| Requirement | What the Appraiser Checks |
|---|---|
| Structural integrity | Foundation, roof, walls in good condition |
| Safety hazards | No exposed wiring, lead paint (pre-1978 homes), asbestos |
| Adequate heating | Functional heating system |
| Water and sewage | Working plumbing and no leaks |
| Roof condition | At least 2-3 years of remaining life |
| Crawl space access | Must be accessible |
| Handrails | Required on stairs with 3+ steps |
| Chipping/peeling paint | Must be scraped and repainted (pre-1978 homes) |
| Water damage | No active leaks or standing water |
Common FHA Appraisal Issues
| Issue | How to Address |
|---|---|
| Peeling paint (pre-1978 home) | Seller must scrape and repaint |
| Missing handrails | Seller must install before closing |
| Broken windows | Must be repaired |
| Non-functional appliances | Must be repaired or replaced |
| Roof with < 2 years life | May require roof replacement or escrow holdback |
| Foundation cracks | Structural engineer assessment may be needed |
Who Should Get an FHA Loan
| FHA Is Best For | Why |
|---|---|
| First-time buyers with little savings | 3.5% down is among the lowest available |
| Buyers with credit scores 580-679 | Better rates than conventional at this score range |
| Buyers who received down payment as gift | FHA allows 100% gift funds |
| Buyers with past bankruptcy (2+ years ago) | Shorter waiting period than conventional |
| Buyers with past foreclosure (3+ years ago) | Shorter waiting period than conventional |
FHA Might NOT Be Best For
| Situation | Better Option |
|---|---|
| Credit score 720+ | Conventional loan (better rates, cancellable PMI) |
| 10-19% down payment | Conventional (lower PMI, auto-cancels) |
| 20%+ down payment | Conventional (no PMI at all) |
| Investment property | Conventional (FHA is primary residence only) |
| Buying a fixer-upper | FHA 203(k) or conventional renovation loan |
| High-cost property | Jumbo loan if above FHA limits |